Busi backs down on bank
‘ILLEGAL GIFT’: RESERVE BANK WANTS BANKORP PROPOSAL REVIEWED Application deals with proposed amendment of Sarb’s constitutional mandate.
Public Protector Busisiwe Mkhwebane will not oppose the South African Reserve Bank’s (Sarb’s) review application.
Her spokesperson, Cleopatra Mosana, said Mkhwebana made her decision after having considered legal advice from senior counsel.
This decision follows after “Report No:8 of 2017/18 on allegations of maladministration corruption, misappropriation of public funds and failure by the South African Government to implement the CIEX Report and to recover public funds from Absa Bank”.
In her report, Mkhwebane found that an amount of R1.125 billion was an illegal gift to Bancorp/Absa Bank and the matter was referred to the Special Investigation Unit (SIU) to approach the president to re-open and amend proclamation of May 1998, in order to recover misappropriated public funds unlawfully given to Bankorp/Absa Bank.
Subsequently, Sarb instituted an urgent high court application to review and set aside paragraph 7.2 of the report, essentially dealing with the proposed amendment of the constitutional mandate of the Sarb.
“Today, the public protector filed her answering affidavit in respect of Sarb’s Judicial Review Application, issued on June 27,” Mosana said.
“In her answering affidavit, the public protector explained the reasons for arriving at the remedial action recommending the amendment of the constitution.”
Mosana said Mkhwebane submitted that “the mandate of Sarb is narrowly stated in section 224(1) of the constitution, as there are central banks in other countries that have relatively multiple or broader mandates”.
“She further explain that the US central bank is one such exam- ple, as well as the central banks of China, India and the United Kingdom, which has additional mandates other than just price or currency stability.”
Mosana said from the investigation conducted, it appeared to the public protector that the major motivation for the “lifeboat” was the fear of a “run on the banks”, which could result in adverse financial impacts and uncertainty among local and international investors and depositors.
“It is not evident that the socio-economic well-being of South Africans, including as regards the diversion of money that could have been used for job creation and other socio-economic objectives featured in the assessment of whether or not the ‘lifeboat’ ought to have been extended,” she said in a statement.
She said such a failure to assess the other socio-economic objectives were probably enabled by the narrowly stated mandate of Sarb.
“If left unchanged or reviewed, this narrowly stated mandate could continue to enable decisions to be taken that prejudice the socio-economic interests of ordinary South Africans, including as to the realisation of full employment or job creation,” Mosana said.